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Network Neutrality papers November 8, 2006

Posted by Jasper in Regulation.
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Recently a number of prominent economists have commented on network neutrality.

In a lengthy paper entitled “A Consumer-Welfare Approach to Network Neutrality Regulation of the Internet,” Professor J. Gregory Sidak, maintains that network neutrality regulation would prevent broadband service providers from offering a guaranteed, expedited delivery speed in return for the payment of a fee. In his analysis, Professor Sidak concludes that,

economic welfare would be maximized by allowing access providers to differentiate services vis-a-vis providers of content and applications in value-enhancing ways and by relying on existing legal regimes to protect consumers against the exercise of market power, should it exist.

Professor Alfred Kahn has published a paper titled “A Democratic Voice of Caution on Network Neutrality.” The piece originated as a comment Kahn posted to a PFF blog entry commenting on the opposition to network neutrality regulations by Bill Kennard. Kahn suggests we put our trust in competition, reinforced by the antitrust laws and direct regulation only when institutions prove inadequate to protect the public.

In essence it is Kahn’s hope that existing regulatory mechanisms – from the FCC and in particular to the Anti-trust Division at the Department of Justice – will prevent abuses. While I am skeptical of the ability to prevent anti-trust abuse in the US, I am nevertheless sympathetic to Kahn’s argument. At least in Europe where the network neutrality debate has had little air-time I think Kahn’s starting point is probably reasonable. Here powers related to Significant Market Power assessment will likely assist in combating any abuse of network neutrality.

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